Deadwood 16

Here's the economics and business angles in this season's fourth episode of Deadwood on HBO.

The show opens with Wolcott - the odious new character from last week - engaging in some casual and brazen industrial espionage by openly scouting the works at Alma Garret's claim.

Back at her hotel, Ms. Garret fires her ward's tutor Ms. Isringhousen and tries to buy some loyalty with a generous severence package. Later we find out that the latter is not pleased and is interested in the disproportionate response of having Garret killed. In fact, she hints that Garret has killed before (although there is no evidence for this).

Crop Ear - a road agent - comes to seek Swearengen's approval for a job. He is prepared to kick the standard 25% back to Swearengen.

Cy Tolliver buys a gold claim (16 Above Discovery) for $600. It's becoming apparent that the rumors of claim invalidation are starting to work, although Ellsworth consoles Alma Garret that such rumors are routine in a gold camp. She later uses that opinion to put pressure on Farnum to sell his hotel to her before its value drops. He is clearly tempted, but as one vector for the rumors, he has an information asymmetry that favors him over Garret.

Jarry, the new Lawrence County Commissioner arrives in town. His plan is to allow any gold claims that predate the treaty with the Sioux to stand (it isn't made clear in the show, but historically that is almost none of them), and to invalidate all other claims. The invalidated claims will be sold at set prices, through a lottery offering a buy or withdraw choice to the winner. Jarry indicates that the lotteries will be fixed in Wolcott's favor. Wolcott's employer Hearst is clearly engaging in regulatory capture. To avoid conflict, Jarry wants a rumor of his presence spread - perhaps the current owners will sell out before the invalidation. Of course, it doesn't make any sense to tell Tolliver this unless it is a hint that he too can bribe his way into an advantage in the lottery.

Star and Bullock are looking to start a bank with financing from Denver. It will require 15% down on their part, for a $2 million stake. Star suggests using Alma Garret's or Swearengen's accounts for collateral, but Bullock isn't interested in either. This is the first time we get a solid indication of how much Garret has made on her late husband's $20,000 investment.

As the show closes, Wolcott tells Tolliver that he will set up a new opium dealer in town, with a saloon and brothel in which Tolliver can have a half interest. Since this will edge in on Swearengen and Wu's businesses, and help Tolliver, it is clearly intended to purchase loyalty.

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Thanks for the review. I had frttoogen about this series. (I don't have cable so I couldn't watch it on first broadcast, but I had heard of it.)I don't like to wallow in too much "gritty" but I like a good dose now and then. I have a high tolerance for language, and if the political incorrectness is justified by character, I don't mine. (I really enjoyed Gran Torino, for instance.)This makes me think I might want to give it a try this summer.

Genesis

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